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The effect of TQM practices on employee satisfaction and loyalty in government C. C. Changa; C. M. Chiub; C. A. Chena a Department of Information Management, Nanya Institute of Technology, Chungli, Taoyuan, Taiwan, R.O.C b Department of Information Management, National Sun Yat-sen University, Kaohsiung, Taiwan, ROC

Online publication date: 14 December 2010

To cite this Article Chang, C. C. , Chiu, C. M. and Chen, C. A.(2010) 'The effect of TQM practices on employee satisfaction and loyalty in government', Total Quality Management & Business Excellence, 21: 12, 1299 — 1314 To link to this Article: DOI: 10.1080/14783363.2010.530796 URL: http://dx.doi.org/10.1080/14783363.2010.530796

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The effect of TQM practices on employee satisfaction and loyalty in government

C.C. Chang a∗, C.M. Chiub and C.A. Chena

a Department of Information Management, Nanya Institute of Technology, Chung-Shang E. Rd.,

Chungli, Taoyuan, Taiwan, R.O.C; b Department of Information Management, National Sun

Yat-sen University, Lienhai Road, Kaohsiung 80424, Taiwan, ROC

Employee satisfaction and loyalty had been verified to be critical to a service-oriented organisation’s survival and success. Previous research also established the importance of total quality management practices in building operational performance and customer satisfaction. This study integrates total quality management practices by introducing employee training, employee empowerment, teamwork, employee compensation, and management leadership into a theoretical model for studying employee satisfaction and loyalty within the context of government. The results of this study show that employee empowerment, employee compensation, teamwork and management leadership are significant positive predictors of employee satisfaction; and employee loyalty can be enhanced through employee satisfaction.

Keywords: total quality management; government; employee satisfaction; employee loyalty; service quality

Introduction

In recent years, increased attention has been paid to employee satisfaction and loyalty in the

management literature. Many studies indicate that loyal employees represent value to a

company and loyal employees are more committed to the continuous improvement of

service quality (Jun, Cai, & Shin, 2006; Hart & Thompson, 2007). While considerable

attention has been paid in the past to research issues related to empirical associations

among total quality management (TQM) practices, organisational performance and customer

satisfaction, literature on issues of understanding the impact of TQM practices on employee

satisfaction and loyalty has emerged only very slowly and in a more scattered way.

As this review has shown, the relationship between TQM implementation and perform-

ance has been undertaken and the relationship is significant (Samson & Terziovski, 1999).

With the rise of the emphasis on citizen service, the government has become a service-

oriented organisation. In order better to understand the nature of employee satisfaction

and loyalty and anatomise its antecedents in government, we refer to the TQM practices,

which aim to explain the direct and indirect effects between employees in the presence

of satisfaction and loyalty. In subsequent years, numerous studies were carried out on

manufacturing firms. To our knowledge, the present study is one of the few studies to

attempt to identify the key attributes for successful TQM implementation in government.

ISSN 1478-3363 print/ISSN 1478-3371 online

# 2010 Taylor & Francis

DOI: 10.1080/14783363.2010.530796

http://www.informaworld.com

∗Corresponding author. Email: [email protected]

Total Quality Management

Vol. 21, No. 12, December 2010, 1299 – 1314

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With seven year efforts of TQM implementation since 2000, Taiwan’s Taipei City

Government (TCG) tried to enhance the service quality through employee satisfaction

and loyalty. The practices held by TCG under this period covered TQM training

courses, employee empowerment, improvement teams, employee compensation, and

management leadership. As members of TCG committee to promote TQM for seven

years, the authors perceived that TCG should be an appropriate background to study the

effects of TQM practices described above. As a result, this study takes TCG employees

as the research population to empirically investigate the effects of TQM practices on

employee satisfaction and loyalty.

Theoretical background and hypotheses

Governments in many countries have been experiencing process re-engineering, which has

been attempting to change the structure, management and even the culture of public

administration (Üstüner & Coşkun, 2004). These types of process re-engineering have

embodied various approaches, including quality management, privatisation and bench-

marking (Carroll, 1996; Auluck, 2002). To enhance the capacity of government and to

create an ideal environment for investment and economic growth, the government has

undergone a series of re-engineering processes, including the civil service (Mengesha &

Common, 2007).

The government is preparing its own customer satisfaction measurement system which

imitates those of profit organisations to improve civil service quality. The majority of

research in Heskett, Jones, Loveman, Sasser and Schlesinger (1994) has focused on the

service profit chain stipulations that there are strong relationships between the service

quality, productivity, employee capability, satisfaction and loyalty in the service

organisations. However, available research data lacks analysis of all the linkages in the

service profit chain in governments. To better understand the nature of employee satisfac-

tion and enhance its potential profit role in government, we refer to the human resource

management (HRM) perspective, which aims to explain service profit chain in government

in the presence of TQM projects.

The related works reported in the literature indicated that TQM projects improve

service quality through technical and interpersonal skills (Rust, Zahorik, & Keiningham,

1996). However, the organisation has often faced a number of problems in the introduction

of TQM, including a lack of senior management understanding of TQM, departments failing

to follow through agreed actions and objectives, lack of support to teamwork and a failure to

match up improvement projects to the skills and resources in the project teams (Wilshaw &

Dale, 1996). These studies appear to contradict one another; some have been said to

demonstrate a training advantage, some a team advantage. There is no general consensus

on which essential TQM practices are better for human capital creating. Common sense

seems to indicate TQM practices’ importance, but we lack empirical support.

In TQM literature, employee involvement, empowerment, and top management

leadership and commitment are identified as crucial elements of a successful TQM pro-

gramme (Bowen, Siehl, & Schneider, 1989). The papers in Ugboro and Obeng (2000)

provide extensive discussions, and top management leadership and employee empower-

ment are considered two of the most important principles of TQM. Hackman and

Wageman (1995) noted that teamwork and employee training are also critical as organis-

ations deploy TQM. Training employees in problem solving and statistical process control,

have been described in the literature, and will promote continuous quality improvement

(Deming, 1986). Compensation is another important principle of TQM. The use of a

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compensation plan in which pay is based on an individual’s achieving quantifiable goals

was associated with the more effective TQM programme.

The primary objective of this study is to develop an empirical model for establishing

associations among TQM practices, employee satisfaction, and employee loyalty. In

particular, we are interested in the isolation of antecedent TQM practices that would

positively impact government employees’ satisfaction. The underlying premise is that

government employees’ loyalty is likely to be influenced by the level of their job satisfac-

tion, and thus maintaining a loyal workforce is a prerequisite for a successful TQM

implementation. Our research model does not include the effects of TQM practices to

loyalty because numerous studies suggest that TQM practices that would directly influence

employees’ job satisfaction (Jun et al., 2006; Ooi, Bakar, Arumugam, Vellapan, & Loke,

2007). Summarising the preceding arguments, the purpose of this research aims to

understand and prescribe how employee satisfaction and loyalty can be influenced by a

set of TQM practices associated with HRM, particularly for employee training, employee

empowerment, teamwork, employee compensation and management leadership.

Summarising the preceding arguments, the research model is proposed in Figure 1.

Employee satisfaction and loyalty

Employee satisfaction is the gratification or pleasurable emotional state resulting from the

valuation of their job (Locke, 1976; Moorehead & Griffin, 1998). Employee satisfaction

has traditionally been defined as an important motivator for employee performance

(Mak & Sockel, 2001). Although business ethicists have theorised frequently about the

virtues and vices of employee loyalty, the concept of loyalty remains loosely defined

(Hart & Thompson, 2007). Employee loyalty was viewed broadly as an employee’s

feeling of attachment or concept deals with the behaviour of the employees to an organ-

isation (Meyer & Allen, 1991). It has been widely argued in the operations management,

Figure 1. Conceptual model of the relationship between the constructs.

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TQM, HRM and service literature that improving employee satisfaction and loyalty leads

to higher service productivity and profits. Employee satisfaction and loyalty are seen as

critical to the capability of service organisations to respond effectively to customer

needs (Silvestro, 2002). Numerous researches indicate that employee satisfaction is posi-

tively related to employee loyalty to their companies (Brown & Peterson, 1993; Griffeth,

Hom, & Gaertner, 2000; Hom & Kinicki, 2001). Evidence from those research results

suggest that the organisation must satisfy employees to make them loyal. There have

been some studies in literature dealing with the value as the mediating variable between

satisfaction and loyalty. The findings of other studies on value and satisfaction provide

support for linking value to satisfaction, not satisfaction to value (Babin, Lee, Kim, &

Griffin, 2005; Jones, Reynolds, & Arnold, 2006). These studies appear to contradict one

another. So we did not put the mediating variable ‘perceived value’ in our research

model because this study intended to put the emphasis on TQM practices and its influence

on employee satisfaction and loyalty. This research, therefore, proposes that there should

also be a linkage between employee satisfaction and loyalty in government organisations.

We thus formally hypothesise:

H1: Employee satisfaction has a positive impact on employee loyalty.

Employee training

The research indicated that training is shown to positively impact on employee’s pro-

ductivity, which results in higher levels of employee satisfaction (Choo & Bowley,

2007). Employee training provides opportunities for the employees to broaden their

knowledge and skills to engage in more efficient teamwork and achieve individual

growth and development. Numerous studies observe that workers who receive training

report higher levels of job satisfaction than those who do not, and the development of com-

petencies through various training programmes has a positive impact on employee satis-

faction (Marie, 1995; Saks, 1996). Several studies also have reported on the benefits of

training, such as realising the rewards of increased skillsets, motivation, higher pro-

ductivity and knowledge transfer of their employees (Oosterbeek, 1998; Pate & Martin,

2000). In particular, employee training increases an employee’s ability to perform tasks

(Choo & Bowley, 2007). Training employees has also been found to result in facilitating

the updating of skills, increasing professionalism and increasing employee commitment

and satisfaction to the organisation (Bateman & Strasser, 1984; Bushardt & Fretwell,

1994). The different research studies also argued that a lack of training has been attributed

to shorter employment tenure, frustration and job dissatisfaction (Pugh, 1984). Therefore,

it is important to make clear the casual linkage between employee training and satisfac-

tion, whether the employee training will increase employee satisfaction or not. We thus

formally hypothesise:

H2: Employee training has a positive impact on employee satisfaction.

Employee empowerment

The definitions and constructs of empowerment has been offered by Conger and Kanungo

(1988, p. 747), who define empowerment as ‘a process of enhancing feelings of self-

efficacy among organisational members through the identification of conditions that foster

powerlessness, and through their removal by both formal organisational practices and

informal techniques of providing efficacy information’. Lawler (1994) referred to employee

empowerment as one of the most important tenets of TQM. Thus, in TQM organisations,

employee empowerment is operated by encouraging employees to respond to quality-

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related problems and giving them the resources and authority to do so. The research also

indicated that empowered employees have higher levels of job satisfaction and performance

primarily because of their involvement in goal setting and in making decisions that affect

their work (Ugboro & Obeng, 2000). Sternberg (1992) recognised that empowerment

positively influences employee attitude and behaviour. Many research results found that

the empowerment programme provides employees with a positive job experience and

leads to higher employee satisfaction (Koberg, Boss, Semjem, & Goodman, 1999;

Seibert, Silver, & Randolph, 2004). Therefore, the following hypothesis is proposed:

H3: Employee empowerment has a positive impact on employee satisfaction.

Teamwork

Teamwork means working together, and typically involves groups of interdependent

employees who work cooperatively to achieve a common goal (Parker & Wall, 1998).

Teamwork can still be a source of employee autonomy, meaningfulness, bonding with

team members, and satisfaction (Denison & Hart, 1996; Mitchell et al., 2001). An effective

team working together towards a common goal can enhance the motivational properties of

work and increase job satisfaction (Griffin, Patterson, & West, 2001). Although, research

on teamwork has shown that the job satisfaction of team members is determined by

multiple factors such as the composition of the team, group processes within the team,

and the nature of the work itself (Gladstein, 1984; Campion, Medsker, & Higgs, 1993),

because these factors operate in combination, there is no simple process through which

teamwork influences job satisfaction. Therefore, employee satisfaction cannot accurately

predict if teamwork will be included. Consequently, we thus formally hypothesise:

H4: Teamwork has a positive impact on employee satisfaction.

Management leadership

The relationship between leadership behaviour and job satisfaction has also received a

great deal of attention in past research. Prior research has examined the relationships

between management leadership and job satisfaction. The research finding reported a posi-

tive relationship between leadership behaviour and job satisfaction (Hinkin & Tracey,

1994). As leaders take care to help and support the contact employees and are concerned

about their needs, these employees will feel more satisfied (Church, 1995; Hallowell,

Schlesinger, & Zornitsky, 1996). Such leader supportive behaviour has been found to

be related to employee job satisfaction (Netemeyer, Boles, Mckee, & Mcmurrian,

1997). Leaders set service standards by their own behaviours and management styles

(Lytle, Hom, & Mokwa, 1998), so management leadership is a critical ingredient in

creating and maintaining an effective and positive service orientation. However, other

research studies found no relationship between management leadership and employee

satisfaction (Downey, Sheridan, & Slocum, 1975; Hampton, Dubinsky, & Skinner,

1986). Therefore, the present study intends to test the following hypothesis:

H5: Management leadership has a positive impact on employee satisfaction.

Employee compensation

Employee compensation systems are most frequently considered as one of the key factors

influencing employee satisfaction (Wageman, 1995; Carson, Carson, Roes, Birkenmeier,

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& Phillips, 1999). Prior research has shown that employee compensation has a positive

influence on employee job satisfaction (Brown & Mitchell, 1993; Oliver & Anderson,

1994; Livingstone, Roberts, & Chonko, 1995). Employee compensation often consists

of financial and non-financial rewards for individuals and teams who contribute to

TQM efforts (Blackburn & Rosen, 1993). Employee rewards are a positive reinforcement,

ensuring that the excellence of service is the main priority of the firm (Cone, 1989).

However, management’s compensation is not always linked to achieving quality goals.

Researchers in the area of services have indicated that, in order to ensure quality, the

organisation should reward its employees on the basis of their behaviour rather than

their results (Hartline & Ferrell, 1996). Therefore, employee compensation is also

crucial in determining employee satisfaction. The following hypothesis is proposed:

H6: Employee compensation has a positive impact on employee satisfaction.

Research method

Sample

The city government of Taipei is the major research environment for testing this model and

for investigating the antecedents of employee loyalty and satisfaction in government. In the

capital of Taiwan, Taipei City Government (TCG) has approximately 11000 administrative

employees and 2.62 million residents (about one third of London or Hong Kong). As the

government district units vary considerably, it is advantageous to sample each subpopu-

lation independently. Stratification is the process of grouping members of the population

into relatively homogeneous subgroups before sampling. Then random sampling is

applied within each subpopulation. The stratified sampling improves the representativeness

of the sample by reducing sampling error. A stratified sampling plan was conducted: 13 out

of the 39 TCG district units which provided direct administrative service to the citizens

were selected randomly in advance. Then one-third of the first line service-providing

employees were selected randomly from each of the above units as the respondents. A

total of 200 employees of the TCG actually participated in the survey. The respondents

were requested to complete the survey in a covering letter from the research team, that

explained the scope of the study and a standardised, self-administered questionnaire was

attached. The questionnaires were distributed and collected in a given unit by one of its

employees, who was commended to support this study. In this way, anonymity and a

confidential treatment of the answers were guaranteed. A total of 167 fully completed

and usable questionnaires were returned within a week, which corresponds to a return

rate of approximately 83.5%. The demographic characteristics of sample described in

Table 1.

Measurement

Special care was taken to ensure that the scales reflected the study’s context, while main-

taining the similarity of items, which were all assessed on a five-point scale, anchored at 1

¼ Strongly disagree, 3 ¼ Neutral, and 5 ¼ Strongly agree. All of the variables were

measured as latent, reflective constructs (see Table 2) that are captured indirectly with

direct measurement items. Employee loyalty was measured with the scales developed

by Davis-Blake, Broschak and George (2003). Employee satisfaction was measured

using the Minnesota Satisfaction Questionnaire (short form, 1967) and the scales devel-

oped by Homburg and Stock (2004, 2005). Five types of TQM practice were identified

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(Spreitzer, 1995; Lytle et al., 1998; Jun et al., 2006): (1) employee compensation; (2) employee

empowerment; (3) teamwork; (4) management leadership; and (5) employee training.

Data analysis and results

Structural equation modelling (SEM) was adopted for the causal relationships data

analyses between the constructs. SEM analysis was chosen over regression analysis,

because SEM can analyse all of the paths in one analysis (Barclay, Thompson, &

Higgins, 1995; Gefen, Straub, & Boudreau, 2000). The Partial Least Squares (PLS)

approach was superior to other SEM approaches for this study because of its flexibility

for distributional assumptions, its small sample size requirements, and its strength in

handling complex predictive models (Fornell & Bookstein, 1982; Hulland, 1999; Ko,

Kirsch, & King, 2005). The computer program used for this analysis was the SmartPLS

version 3.0 (Hansmann & Ringle, 2004) because this study aims at theory development

instead of theory testing (Komiak & Benbasat, 2006). On the other side, PLS supports

Table 1. Demographic characteristics of sample.

Demographic variable Sample composition

Gender Men Women

19.6% 80.4%

Age Over 51 years 41 – 50 years 31 – 40 years 21 – 30 years Less than 20 years

0.6% 18.5% 39.9% 31.0% 10.1%

Education Graduate degree Some graduate work University or college degree Some university or college Secondary school or less

10.7% 41.7% 35.7% 11.9% 0.0%

Government work experience Less than 1 year 1 – 5 years 6 – 10 years Over 10 years

11.3% 31.5% 18.5% 38.7%

Department work experience Less 1 year 1 – 5 years 6 – 10 years Over 10 years

14.3% 47.0% 14.9% 23.8%

Table 2. Measurement.

Constructs Items References

Employee loyalty 4 Davis-Blake et al. (2003) Employee satisfaction 4 Homburg and Stock (2004, 2005)

Weiss, Dawis, England and Lofquist (1967) Employee empowerment 3 Spreitzer (1995) Employee training 3 Lytle et al. (1998) Teamwork 3 Jun et al. (2006) Employee compensation 3 Jun et al. (2006) Management leadership 3 Lytle et al. (1998)

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exploratory research, this study uses PLS as the research model proposed that is consistent

with all currently available theoretical knowledge and collect data to test the theory

(Marcoulides & Saunders, 2006).

The procedure of data analysis with PLS suggested by Hulland (1999) was followed

and chosen using a bootstrapping method (Efron & Gong, 1983) to determine the

significance of the paths within the structural model. Standard errors of parameters

were computed on the basis of 500 bootstrapping runs. Bootstrapping method is a

modern, computer-intensive, general purpose approach to statistical inference, falling

within a broader class of resampling methods. It has gained great popularity in the

statistical research literature as a method for solving tougher problems (Efron, 1979).

To estimate the significance of the path coefficients, we used the bootstrapping method

with a sample size of 500, as recommended by Chin (1998).

The sample size of 167 exceeded the recommended minimum of 60, which represented

10 times of: (1) the number of items comprising the most complex constructs; or (2) the

number of independent constructs directly influencing a dependent construct (Barclay

et al., 1995; Wixom & Watson, 2001). According to Hulland’s (1999) procedure, a PLS

model is analysed and interpreted in two stages. In the first stage, the measurement

model has to be tested by performing validity and reliability analyses on each of the

measures of the model to ensure that only reliable and valid measures of the constructs

are used before conclusions about the nature of the constructs relationships are drawn

(Hulland, 1999). In the second stage, the structural model is tested by estimating the

paths between the constructs in the model, determining their significance, as well as the

predictive ability of the model.

Reliability and convergent validity

The adequacy of the measurement models was evaluated on the criteria of reliability, con-

vergent validity, and discriminant validity. Reliability and validity were tested with regard

to: (1) individual item reliability; (2) the convergent validity of the measures associated with

individual constructs; and (3) discriminant validity. Firstly, reliability was examined using

the composite reliability values. Table 3 shows that all the values are above 0.8, which is

the commonly accepted level for explanatory research. The convergent validity of the

scales was verified by using two criteria suggested by Fornell and Larcker (1981): (1) all

indicator loadings should be significant and exceed 0.7; (2) the average variance extracted

(AVE) by each construct should exceed the variance due to the measurement error for that

construct (AVE should exceed 0.50). For the current measurement model, most indicator

loadings were above the 0.70 threshold (see Table 4), expect one at 0.63. AVE ranged

from 0.69 – 0.79 (see Table 3). Hence, both conditions for convergent validity were met.

Table 3. Reliability and convergent validity.

Constructs AVE Composite reliability R square Cronbach’s Alpha

Compensation 0.74 0.89 – 0.82 Loyalty 0.68 0.90 0.59 0.84 Leadership 0.72 0.89 – 0.81 Empowerment 0.79 0.92 – 0.87 Satisfaction 0.69 0.90 0.66 0.85 Training 0.76 0.90 – 0.84 Teamwork 0.74 0.90 – 0.83

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Discriminant validity

Discriminant validity implies that measures of a given construct differ from those of

another (Hulland, 1999). The discriminant validity of the scales was assessed using the

guideline suggested by Fornell and Larcker (1981): the square root of the AVE from

the construct should be greater than the correlation shared between that construct and

others in the model. Table 5 lists the correlations between the constructs, with the

square root of the AVE on the diagonal. All of the diagonal values exceed the inter-

construct correlations; hence the test for discriminant validity was acceptable. Therefore,

we conclude that the scales should have sufficient construct validity.

Path coefficients and predictive ability

The assessment of the structural model involves estimating the path coefficients and the R 2

value. The path coefficients indicate the strengths of the relationships between the inde-

pendent and dependent variables, whereas the R 2

value is a measure of the predictive

power of a model for the dependent variables. Table 6 and Figure 2 show the path coeffi-

cients, their significance level and the R 2

values of the endogenous variables. The PLS

analysis results (see Figure 2) show that only one hypothesis has a negative effect and

other hypotheses are supported. Thus the proposed theoretical model in Figure 1 is par-

tially supported. In this study, the model accounts for 58.7% to 66% of the variances

(R 2

scores). In addition, all of the paths are significant at the level of 0.05 (Figure 2).

Thus, the fit of the overall model is good. Employee satisfaction increases loyalty in the

government (b ¼ 0.82, p , 0.01). Employee empowerment (b ¼ 0.28, p , 0.01), team-

work (b ¼ 0.18, p , 0.05), management leadership (b ¼ 0.39, p , 0.01) and employee

Table 4. PLS confirmatory factor analysis and cross-loadings.

CP LO LS PO SA TR TW

CP1 0.88 0.48 0.53 0.49 0.58 0.47 0.40 CP2 0.85 0.45 0.44 0.39 0.46 0.42 0.39 CP3 0.85 0.53 0.52 0.46 0.54 0.46 0.51 LO1 0.45 0.86 0.58 0.60 0.69 0.57 0.62 LO2 0.44 0.83 0.58 0.48 0.59 0.46 0.48 LO3 0.44 0.86 0.54 0.43 0.64 0.40 0.52 LO4 0.55 0.76 0.52 0.49 0.60 0.46 0.48 LS1 0.43 0.49 0.79 0.59 0.58 0.55 0.60 LS2 0.50 0.61 0.87 0.66 0.64 0.66 0.56 LS3 0.54 0.59 0.89 0.77 0.69 0.67 0.64 PO1 0.40 0.54 0.67 0.90 0.63 0.65 0.59 PO2 0.50 0.57 0.75 0.89 0.65 0.70 0.67 PO3 0.49 0.51 0.70 0.88 0.62 0.63 0.57 SA1 0.42 0.63 0.71 0.68 0.89 0.50 0.53 SA2 0.43 0.64 0.69 0.71 0.88 0.55 0.64 SA3 0.68 0.56 0.52 0.43 0.73 0.38 0.46 SA4 0.56 0.72 0.57 0.54 0.82 0.47 0.52 TR1 0.45 0.54 0.67 0.68 0.53 0.88 0.61 TR2 0.49 0.43 0.60 0.61 0.47 0.85 0.58 TR3 0.43 0.51 0.66 0.65 0.49 0.88 0.62 TW1 0.54 0.51 0.63 0.62 0.51 0.64 0.85 TW2 0.38 0.53 0.66 0.67 0.56 0.63 0.88 TW3 0.39 0.61 0.55 0.50 0.60 0.54 0.85

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Table 5. Latent variable correlation matrix.

Constructs CP LO LS PO SA TR TW

Compensation 0.86 – – – – – – Loyalty 0.57 0.83 – – – – – Leadership 0.58 0.67 0.85 – – – – Empowerment 0.52 0.61 0.80 0.89 – – – Satisfaction 0.62 0.77 0.75 0.71 0.83 – – Training 0.53 0.57 0.74 0.74 0.57 0.87 – Teamwork 0.50 0.64 0.71 0.69 0.65 0.70 0.86

Notes: CP: employee compensation; LO: employee loyalty; LS: management leadership; PO: employee empowerment; SA: employee satisfaction; TR: employee training; TW: teamwork. Square root of AVE is on the diagonal.

Figure 2. Structure model and results of partial-least-squares analysis. Note: ∗significant at the 0.05 level; ∗∗significant at the 0.01 level.

Table 6. Summary of the hypothesis test results.

Association Hypothesis Casual path Path coefficients t-value Supported

Loyalty H1 SA – . LO 0.82 31.96 b

Yes Satisfaction H2 TR – . SA – 0.17 2.08

a No

H3 PO – . SA 0.28 2.84 b

Yes H4 TW – . SA 0.18 2.24

a Yes

H5 LS – . SA 0.39 3.86 b

Yes H6 CP – . SA 0.25 3.37

b Yes

Notes: a Significant at p , 0.05 level;

b Significant at p , 0.01 level.

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compensation (b ¼ 0.25, p , 0.01) increase employee satisfaction. However, employee

training (b ¼ – 0.17, p , 0.05) in this study shows negative effect on employee satisfac-

tion which deserve our attention. The R 2

values of the endogenous constructs are 0.587

(employee loyalty) and 0.66 (employee satisfaction). Thus, it can be concluded that the

hypothesised model is partially supported by the data.

Discussion

The results of the study clearly demonstrate the effects of TQM practices in the govern-

ment from the HRM perspective. The results also show that employee compensation,

empowerment, teamwork and management leadership are significantly and positively

associated with employee satisfaction. The research data are consistent with prior empiri-

cal studies that employee satisfaction is positively related to employee loyalty, even

though the organisation they served is the government in this study. While prior research

in TQM has examined the relationship between satisfaction and loyalty (Jun et al., 2006) in

the HRM perspective, this study is the first to examine the role of TQM practices in

government. The findings indicate that: (1) TQM practices acts indirectly on employee

loyalty through the mediating effect of employee satisfaction; and (2) employee training

has negative effect on employee satisfaction. Those results show that the hypotheses are

strongly supported.

Theoretical implications

This research extends the previous work on the perspective of HRM in government TQM

programmes, and the results indicate that many of the empirical associations among

TQM practices, such as employee satisfaction and loyalty, are also found to be significant

in this study. In other words, TQM as a holistic management philosophy is applicable across

different kinds of organisations, such as profit or non-profit organisations. The result

confirms that the government workers’ satisfaction had a significant, positive impact on

their loyalty towards the organisations, and its effect size is substantially large (R 2 ¼

0.587). Such a strong relationship between satisfaction and loyalty may be attributed to

the unique government workplace culture. The current study also found that all the TQM

practices will affect the employee satisfaction. Management leadership, empowerment,

teamwork and employee compensation have a significant and positive influence on

employee satisfaction. The improved employee satisfaction leads to a higher level of

employee loyalty. Moreover, the finding that employee training has a negative effect to

employee satisfaction has a meaningful implication.

Practical implications

The contribution of this study is critical to the literature on government quality manage-

ment and organisational studies as well, as these links have never been studied before.

Since employee satisfaction significantly affects their loyalty to the organisation, it may

be necessary for government managers to enhance the overall employee satisfaction

levels. The studied TQM practices are verified to significantly affect employee satisfac-

tion. Therefore, the government can improve employee satisfaction through TQM

practices. Empowering employees to gain the higher levels of job satisfaction in turns

works efficiently because of their involvement in goal setting and in making decisions

that affect their work. The appropriate empowerment provides employees with a positive

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job experience and leads to higher employee satisfaction. Although teamwork has signifi-

cant effects on employee satisfaction, there are still multiple factors such as the compo-

sition of the team, group processes within the team, employees’ lack of knowledge of

their co-workers’ contributions, high levels of trust, or the nature of the work itself, that

determined the teamwork construct. Future research can take these additional factors

into consideration when analysing the effect of teamwork. The research finding reported

a positive relationship between leadership behaviour and job satisfaction. As leaders take

care to help and support employees and express concern about their needs, these employ-

ees will feel more satisfied. Employee compensation often consists of financial and

non-financial rewards for individuals and teams who contribute to TQM efforts and has

a positive influence on employee job satisfaction.

An important practical implication of these findings is that governments may be able

to improve employee loyalty via employee satisfaction. TQM practices have confirmed in

this study that it will improve employee satisfaction, except the training. Different

research studies argue that a lack of training has been attributed to shorter employment

tenure, frustration and job dissatisfaction. This study also has a different finding: the

employee training has a negative effect on employee satisfaction, so it is worth

keeping an eye on it. Based on our practical experiences, some possible reasons with

related suggestions for this worrying finding were proposed as follows. First of all, the

negative impact may be attributed to overlong training hours; some of the training

courses in TCG require too much time and effort for first-line governmental employees

who already have a heavy workload. Hence, it is important for those government manage-

ments to design and provide courses with appropriate training hours. Another reason may

be the bureaucratic structure of government makes employees less motivated to receive

training, since training raises expectations that cannot be met as career opportunities

are not available. Furthermore, the size of some TCG training classes tends to be big.

Roth and Bozinoff (1989) indicated that people who receive training conducted in

small groups are more satisfied with education. Thus, keeping the training classes

small may be an effective way to improve satisfaction. In addition, the training courses

design should correctly link to job skills and competencies required by the employees.

This study suggests that as the government implements training programmes it must be

very careful to redesign the schedules and programmes based on employees’ diverse

needs for effectively sustaining the quality of training. However, some future studies

with qualitative interviews/open ended survey questions should be urgently conducted by TCG in order to clarify the real reasons behind this negative training effect on satis-

faction, and further provide feedback for redesigning the training programmes. Without

knowing the real reasons, it is impossible to know how to redesign the effective training

programmes in the future.

Other TQM practices are also very important as the government undertakes service

quality improvement projects. The government should organise the employees as a

team and establish trust between the team members. The government can also give the

employee enough empowerment to make them feel greater identification and reduce the

feeling of powerlessness related to policies. An effective strategy is giving government

employees financial and non-financial rewards, especially non-financial rewards such as

praise and recognition, because the financial recognition system in Taiwan governmental

system tends to be less flexible compared to private enterprises. Practically, an internal

service quality awards with official ceremony, for instance, has been held by TCG

annually for six years in order to achieve the employee recognition and motivation by

means of non-financial rewards.

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Encouraging management leaders to better take care of employees is another important

way to improve satisfaction. Establishing a long-term relationship between management and

employees can enhance satisfaction. In the government organisation, our findings strongly

support the view that the fundamentals of TQM, including employee compensation,

employee empowerment teamwork and management leadership, must be implemented

simultaneously, regardless of the organisational and cultural contexts (Sousa & Voss, 2002).

Limitations and future research

There are some limitations of the current study, which suggest some directions for possible

extensions in the future. Firstly, the study is based on data collected from an Asian city

government. Although there may be some commonality among all of the government

organisations, readers should be cautious about generalising the results, especially to affili-

ates in other countries. Thus, future research may be conducted to verify these results by

studying government organisations located in a variety of regions. Secondly, it should be

noted that, since the presented study focuses only on the five types of TQM practices

associated with human resources, other important practices such as employee selection,

employment security and the selective hiring of new personnel, were excluded from the

study’s model. Thirdly, when testing the effect of employee satisfaction on employee

loyalty, the mediating variable ‘perceived value’ was ignored in the research model due

to simplification consideration. Future research can include the perceived value to test

its mediating effect between satisfaction and loyalty. Finally, the presented study

employed a cross-sectional survey method, which is limited in exploring the longitudinal

evidence of how TQM practices evolve in organisations. If one can examine the changes in

employee satisfaction and loyalty at different stages of TQM implementation, this would

be more helpful in identifying the specific causality between TQM practices, employee

satisfaction and loyalty.

Conclusion

This study proposed that government employee satisfaction and loyalty may be improved

through the inclusion of TQM practices associated with human resources. The empirical

test of the TQM practices found the model to be strongly supported, with only one path

indicating a negative effect in the hypothesised directions. The study shows that employee

empowerment, employee compensation, teamwork and management leadership are sig-

nificantly positive predictors of employee satisfaction within the context of government.

The study also provides evidence that employee loyalty is built through employee satisfac-

tion. Researchers, therefore, should give careful consideration to the unique government

environment when investigating the relationship between the training and satisfaction.

In summary, this study contributes to the service management literature by proposing

theoretically and testing empirically a perspective that links TQM practices to employee

satisfaction and loyalty within the context of government.

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